Australian Finance and InvestingAustralian Finance and InvestingThis blog is a place for learning, sharing and exchanging ideas for personal finances and investing in Australia. Articles
A Time to Sell
2008-02-04 17:20:00 The market finally had a good run last week and was up again today. However there is still a long way to go in recovering December and January's losses. In fact I am still sceptical as to whether the current positive market trend will continue; Is the recent 3-4% market rise the start of an up trend or just a temporary bounce before the market resumes its decline? The big reason that the markets went down over the past few months was the potential impact from a weakening American economy (which some experts say is already in a recession) and tightening of global credit markets resulting from the sub-prime contamination. So what has changed? Nothing really. In fact it looks like things have gotten worse in the US with job creation numbers falling for the first time in 5 years and there was much more government intervention to keep the economy propped up. Inflation is rising as the US dollar weakens and many housing experts predict that we are just entering the eye of the storm when ... More About: Time , Sell
Microsoft + Yahoo > Google ?
2008-02-01 15:30:00 Google missed analyst earnings estimates yesterday, but the company still posted a strong increase in earnings and revenue figures. Even though earnings may have missed analyst expectations and the shares getting hit hard (down 7% in Friday pre-market trade), the dominance of Google was demonstrated today by possibly the biggest takeover this year - Microsoft 's $US44.6 billion bid for Yahoo . This is a candid admission that the game has changed -- and that neither Microsoft or Yahoo can battle the Google juggernaut alone in the online advertising market. "The online advertising market is growing at a very fast pace," the world's biggest software company [Microsoft] said in its press release. "Today this market is increasingly dominated by one player [Google]." There is still a way to go before a possible Microsoft and Yahoo tie-up, but should they merge, Goggle may finally have a serious competitor in the search and advertising space. Stay tuned.See more at the WSJ or view the vide... More About: Google , Yahoo!
My Superannuation Fund Managers Outlook - Read between the lines
2008-01-31 22:59:00 My superannuation fund in Australia - Colonial First State (CFS) - sent me my annual statement for the year. Suffice to say that with the market drops towards the end of 2007, my returns were not so great. I am sure others were in a similar boat. Here is what CFS said in their statement to assuage investors that things aren't so bad... " Outlook for the Australian and global sharemarkets in 2008 The Australian economy is well-positioned to grow for the next few years. This economic growth is based on a number of factors, and these same factors should influence the sharemarket: ? We are in a resources boom, fuelled by China liberalising and urbanising. ? Australia has an independent Reserve Bank that can help manage inflation and interest rates. ? Governments have accepted that their spending and taxing needs to be kept roughly in balance over time. Market sentiment for the Australian economy is presently bright. On the global front, the International Mon... More About: Read , Fund , Managers , Lines
The Crumbling Greenback
2008-01-30 21:51:00 With the price of gold soaring past US$940 and yet an another drop in US interest rates (by 0.5%) overnight, you know the US dollar is heading lower. This makes other currencies like the Australian and NZ dollars appreciate even more. Here are some interesting events demonstrating the fall of the once mighty greenback: -The Taj Mahal, one of the world's seven wonders, welcomes about 2.5 million visitors each year--provided they don't try to buy tickets with US dollars. India's most popular shrine announced in November that it would stop accepting the plunging U.S. currency and take only rupees.- Brazilian supermodel Gisele (pictured right, courtesy of dklimke) and other entertainers are reportedly refusing US dollar based payments and asking instead for payments in Euro's. - Asian and Persian Gulf nations are concerned that the flight from the dollar is feeding on itself and may spur a crisis of confidence. Kuwait abandoned a dollar peg in May due to its weak buying power. South...
Monkeys Everywhere - Financial Trickery!
2008-01-29 17:13:00 Here's a funny joke I received the other day, which really does sum up legal scams in financial markets all over the world. A man offered to buy monkeys from a village.The villagers, seeing that there were many monkeys around, went out to the forest and started catching them.The man bought thousands at Rs 10 and as supply started to diminish, the villagers stopped their effort.He further announced that he would now buy at Rs 20. This renewed the efforts of the villagers and they started catching monkeys again.Soon the supply diminished even further and people started going back to their farms. The offer rate increased to Rs 25 and the supply of monkeys became so little that it was an effort to even see a monkey, let alone catch it!The man now announced that he would buy monkeys at Rs 50! However, since he had to go to the city on some business, his assistant would now buy on behalf of him.In the absence of the man, the assistant told the villagers. Look at all these monkeys in the ... More About: Financial , Monkeys
Happy Australia Day - Australian Statistics
2008-01-27 22:50:00 With another Australia day weekend past us, it is always interesting to know what is happening in and around Australia, what is changing and future trends. In fact for some of my financial analysis I look at past and future trends to try and gauge the impact of various macroeconomic issues (eg age demographics shows an ageing population, which suggest superannuation companies like AMP can benefit from this trend). It is also just interesting to see what is happening in Australia. The best site for this is the Australian Bureau of Statistics (ABS) website which has tons of useful statistics. Best of all, it is all free - thanks to our taxes! Here are some national statistics you should be aware of:- Australian Population : 21,194,703 (1.02% of world population). Projected population by 2100 : between 22.4 and 43.5 million. 7%?10% of the population is expected to be over 85 yrs old by 2101! - Number or employed Australians is 10,588,500, with unemployment rate at a historically low 4.... More About: Happy , Australia Day
American Stimulus Plan....delaying the inevitable
2008-01-25 23:13:00 The US government announced one-time tax rebates to pump about $150 billion into the economy this year and perhaps stave off the first recession since 2001. About two-thirds of the tax relief would go out in rebate checks to 117 million families beginning in May 2008. Businesses would get $50 billion in incentives to invest in new plants and equipment. Basically, Individual taxpayers would get up to $600 in rebates, working couples $1,200 and those with children an additional $300 per child. Businesses can write off 50% of purchases of capital equipment"This package will lead to higher consumer spending and increased business investment," Bush said in hailing the agreement. Or will this just delay the recession? The government is trying to help, but as history as shown markets are complex and fiscal policy (government driven) has temporary and limited effect. Hey, given I am working in the US, I am not complaining too much as I get a slice of the rebates. Doesn't make me want to ru... More About: American , Plan
5 Easy Ways to Save Money
2008-01-24 01:22:00 If one of your New Year's resolutions is to save money, you're probably preparing yourself for a long year of penny pinching and bargain hunting. But saving more doesn't have to be such hard work. Here's five easy ways I have found to put more money in the bank no matter how much you make. 1. Set up automatic deposits into a high interest savings account. Direct More About: Money , Save Money , Save , Easy
Meltdown, but don't panic and sit tight.
2008-01-22 20:14:00 The S&P/ASX200 index lost 393.6 points to close at 5186.8 (down 7.3%), the lowest point in two years, while the All Ordinaries was smashed by 408.9 points to end at 5222. This was the biggest drop since the October 1987 crash and the fourth worst day in history. Panic selling gripped the market and a number of traders were desperately selling. Back in the states, I was shocked when I checked
Confirmed - Australia least affordable nation for housing
2008-01-21 10:14:00 Following on from a past post on the unaffordability of housing in Australia , a recent article in the Australian discussed the housing affordability results from a survey of 227 cities published in the 2008 Demographia study. This just confirmed that overall Australia is the least affordable country for housing and that are most of our major cities would be classified as "severely unaffordable". Here are some interesting points from the article:- Sydney is ranked the 11th least affordable city in the international survey.- The least affordable place to live in the world is Los Angeles, but because Australia has the most cities - 18 - in the top 50, it is the least affordable nation for housing. s- There are no affordable markets in Australia and there are no moderately unaffordable markets. Twenty-five of the 28 markets are rated severely unaffordable.- All of the large capital cities (Sydney, Perth, Melbourne, Brisbane and Adelaide) are rated severely unaffordable.- Perth, ranked 1... More About: Real Estate , Nation , Housing
Love, Health and Wealth = Happiness
2008-01-20 08:41:00 The title of this post is my interpretation of an old Chinese proverb that talks about the ingredients of happiness. So why I am talking about this in a finance blog? Well, it is because is reflects my thoughts at the end of my holidays back home to Sydney, Australia. Here's my breakdown on the quote: Love : This refers to Family and Friends. Having a loving family who can support you in good times and bad is extremely important. I am fortunate to have this as demonstrated during my holiday where I had plenty of "good" times thanks to my family and friends. You sometimes take your family for granted and it is only when you do not have them around for support that you realize what you are missing. In addition, spending time with close friends made the holiday especially enjoyable. Despite being away for over a year, true friends make you feel like you never left and it was great to feel part of a close group of friends. The friendly pressure to come back to Sydney was a nice sign th... More About: Health , Wealth , Happiness
What's your prediction for the Australian Dollar by June 2008 - Vote Now.
2008-01-17 08:35:00 In a post a few months ago I had predicted that the $A would finish 2007 at 0.95c against the US dollar (I.e $1 Australian dollar buys 0.95 US dollars). I then went on to say that it would reach parity by Mid 2008. Well, I can admit my prediction was a bit too optimistic and the Aussie dollar finished 2007 at about 0.89c, and is currently at those levels. I didn't predict the ASX and metal price downturn that started in Mid December and is still going on. This was the biggest drag on the $A. Anyway, I still think with interest rates set to drop in the US (to curb the recession they are expected to have) and booming growth/employment in Australia (record job numbers announced today) that the $A will continue to rise. Also looks like the RBA will have to increase interest rates to curb inflation despite the global slowdown. This will help the $A and I am still predicting parity of the two currencies by June 2008.However, I would like to get my readers views on where the $A will finis... More About: Dollar , Vote , June 2008
Reader Questions - Australian IT companies, UK Superannuation & NIB Shares
2008-01-17 01:02:00 Here are there 3 reader questions I received over the last few weeks and responses to them. These are only opinions based on available information and should not be constituted as legal or professional advice.Q1 : From VN: I recently read an article on stocks to watch for 2008. They talk about IT Stocks doing well in 2008. I am interested to know if you have any resources on where I can find discussions about Aussie IT Stocks. With not much access to global IT Stocks (unless you got $10000) , I would like to follow the Aussie IT companies and watch the growth and the ones to watch out for. I work in IT, it would be easier for me to decipher the"true" intentions of the org.Answer : Click here for a list of all the publicly listed IT companies in Australia. This list is the XIJ technology sector and provides a good starting point to begin your research. I would do a a Google search for more background details on the company(s) you are interested in.Unfortunately ASX listed IT companie... More About: Companies , Questions , Reader , Australian , Shares
Big Money from the Subprime mess
2008-01-15 17:44:00 Well looks like it is going to be 8 down days in a row for the ASX 200 tomorrow, given the sharp fall in the Dow Jones overnight. What a terrible start to the year! It is depressing to just look at my portfolio and the red values around it.The sub prime/credit crunch mess that started all this has been bad for most, but some traders made a killing by shorting the trend (i.e. bet that this all would happen). Here is an interesting article from the WSJ about a trader (John Paulson) who made $4 billion last year from this. Should have invested in his fund.Comment on this article at www.financeviewpoint.com More About: Money , Subprime , Big Money , Mess
What a difference a year makes - 7 Changes I have noticed
2008-01-14 11:04:00 After more than a year away from Sydney it has been great to be back on holidays. It is especially good to get away from the freezing winter in the states.However, I have noticed a number of economic changes in the time I have been away. Some are good and some are not so great. For locals many of these changes have been gradual and probably slipped by unnoticed, but coming from overseas and living in a different economy the changes are definitely apparent. So here are the 7 changes I have noticed:1. Australia ns are richer or at least appear to be. There is a definite feeling amongst the people I have met that they are better off and more secure financially. This is in part due to the ongoing economic boom in Australia and shortage of workers, resulting in higher salaries. Also, the stock market and property has done well boosting (on paper at least) the wealth of the average Australian.2. Things are more expensive and I am surprised inflation here is not higher (currently 3%). This ... More About: Difference , Year , Diff
Save $360 just by filling on the right day
2008-01-12 10:20:00 One thing I noticed when living in Sydney and which still persists during my visit back is that fuel prices vary dramatically during the week. The thing that allows you to save money with this price variability is the fact there is a clear trend. Fuel prices are the lowest on certain days, e.g. Monday and Tuesday and the highest on Wednesday in Sydney. For example, on Tuesday last week the average price of fuel at 5 fuel stations near where I am staying was $1.33. On Wednesday the average price was $1.48. The days may vary across the various capital cities, but the trend is still present.If you manage this variability you can realize significant savings. If you are a regular commuter you will most likely fill fuel once a week. Assuming 48 working weeks in the year and an average 4D sedan with a 50 litre fuel tank, results in a saving of $360 (=$0.15*50*48) per annum. This is equivalent to a pre-tax saving (i.e. how much you need to earn) of over $550. This is a significant and easy ... More About: Save
Stock Review : Bluescope Steel (BSL) - Leveraging Strong Global Steel Deman
2008-01-10 01:29:00 A Sharecafe article painted a rosy picture of the outlook for global steel demand. Some key points were:- World steel demand to hit more than 1,450 million tonnes in 2011, which is up more than 320 million tonnes from the 2006 level of 1,134 million tonnes. Early figures indicate consumption in 2007 rose 7.1% from the 2006 level to 1,215 million tonnes, with a further 21% increase expected over the next four years.- Asia to lead the way in terms of stronger demand, with more than 65% of the extra demand between 2006 and 2011 to come from the region driven by a 40% increase in China. Demand in Emerging economies like Africa and the Middle East is expected to rise by as much as 50%.- The increased demand from emerging regions will offset modest growth among the more industrialised nations. The share of world consumption attributed to these regions (Western Europe and the NAFTA countries) has fallen from almost 50% in 2000 to around 33% now. On its forecasts the MEPS group expects this... More About: Review , Global , Stock , Strong , Steel
Bill Gates Funny Retirement Video
2008-01-09 05:34:00 Love him or hate him, Bill Gates has been one of the most influential figures in the world of technology (and the richest man to boot) for the last 20 odd years. Just to show his lighter side, here is a very funny short video he presented at the 2008 CES show. Has a number of US celeberities and political characters throught the video. Who knew Bill could be funny! Video Running time is approx 8 minutes.Did you like this post? If so, subscribe to financeviewpoint.com by clicking here.Comment on this article at www.financeviewpoint.com More About: Funny , Retirement
Doom and Gloom - Stop.Review.React
2008-01-07 23:28:00 "Growing fears the United States economy is slipping into recession - Dow to its worst start since the Great Depression"With headlines like this coming from the world's largest and most influential economy it is time to take action and evaluate our investment positions. Bad news from the US has been flowing over the last 6 months, but has not had too much impact on the Australian markets. Until recently that is. NAB raised interest rates due to increases in their costs for wholesale funds arising from the subprime fallout. Other banks will soon follow suit and with increasing inflation in the Australian economy, interet rates are set to rise by 1-2% this year. The ASX 200 has also been performing very poorly this year and is down 4% since the start of the year (over 2% yesterday and more falls expected today). Normally their is always some optimism for a rebound in share prices, but things are starting to look increasingly grim fom broker and media reports I have been reading.So wh... More About: Review , Stop , Doom , React
How would you spend $5 Million dollars?
2008-01-03 08:17:00 Sometimes, it is nice to plan for what one would do if they won the lotto or had a sudden windfall of money. The NY times talked to a few people who won/inherited or came into significant amounts of money. Here are some lessons from these folks.> For a lot of people, the money is the end. But that?s just the beginning. You need to decide what your goal is and stick to it.> For anyone with a net worth of $250,000 or less, a windfall can be a real shock. The article's financial expert advises clients to spend 5 to 10 percent at once, to have a little fun. The rest should be managed carefully using professional advice.>Put your money somewhere not idiotic and leave it alone as much as possible. > For people who did not grow up wealthy, suddenly having to figure out how to conserve and build on a seven- or even eight-figure windfall is not easy. Nor is it easy to find smart, solid advice for handling it.So keeping these in mind, here is how I would spend $5 million if I got it tomorrow... More About: Million , Dollars
Stock Review : JB Hi-Fi (JBH)
2008-01-01 04:40:00 One of the preliminary screeners I like to use when searching for stocks that are potential buys is the Price to Earnings (PEG) ratio. See this post for details on this ratio. The table below (from Aegis Equity Research) shows top Australian stocks by PEG ratio as of January 2008.Two that I like are Babcock and Brown Wind partners (BBW) and JB Hi-Fi (JBH). I have written about BBW previously (see here) and still think it is a good buy despite recent market volatility. The shift towards Green Energy is a global trend that continues to gain momentum, making companies that provide these types of energy, a good bet. BBW's strong cash flow generation from its assets should also deliver solid distribution (dividend) growth over the medium term. The stock I did want to talk about in this post is JB Hi-Fi (JBH). Various people in the consumer electronics industry I have talked to seem to think this stock still has a lot of upside, despite its stellar run over the last few years. Management... More About: Review , Stock
Hot Aussie Stocks for 2008 with Analyst predictions
2007-12-29 22:56:00 Ah, tis the time to make predictions for 2008 . Based on writing this blog, reading various financial media and looking at expected macroeconomic factors, here is my quick prediction for hot stocks in the year ahead. BHP - A play on the continuing China growth story and potential acquisitions (RIO anyone?). Recent market weakness provides an attractive entry point into the stock.BBW - A play on the growth of renewable (wind) energy. This is one to keep for the long term.WOW - A solid defensive retail play. If the US recession spreads to Australia, this is one of the stocks that should hold up better than most.MAP - Airlines are flying at 80%+ loads and continued growth in the aviation sector should benefit Airports owned/managed by Macquarie Airports. Also has no US exposure.AMP - Superannuation continues to grow and this company is well positioned to benefit. News.com published an article with analyst stock recommendations for 2008, here is a summary of their predictions. See the ar... More About: Stocks , Predictions , Analyst , Aussie
Australian Pre-Paid Moblie (Cell) Phone Plans Review
2007-12-27 00:46:00 One of the first things on my to-do list while in Australia for my Christmas holidays is to get myself connected via a pre-paid (GSM) mobile plan. I have my own handset so all I need is a SIM card and associated plan for the time I am here. As I have lived in Australia previously, I know who the main mobile carriers are, but had not used their prepaid services before. Here are my findings from the main carriers and the best deals I found. The key thing to decide before you choose a plan is whether you want more talk or text. Click on the Carrier names to go to the pre-paid offer pages. A few key points to consider when choosing your pre-paid plan:- All incoming calls are free. If this is not the case, choose another plan.- Most plans have an expiry date (30 days minimum), so make sure you check this.- Search online for the available deals and then go to the company shop (located in most malls across the country) to buy the pre-paid sim card pack. Check it works with your phone befor... More About: Phone , Cell Phone , Review , Cell , Paid
Tips for Navigating the Australian Metro Rental Market
2007-12-24 03:00:00 Residential rents have stabilised after a year of strong price growth according to property price information provider Australian Property Monitors (APM). However, rental properties near the CBD?s of major cities in Australia are still in hot demand. Earlier this year my brother had a tough time finding a property to rent in Sydney. His apartment lease had just expired and as the landlord wanted to move back in, he had to find a new place to live. With an initial budget for $400, he wanted to find a place within 10Km's of the city. However, he soon discovered that he would need closer to $500 to get a 2 bedroom apartment and that becuase demand was so high, even putting in 10-20% above the asking price would not guarantee a place. In a period of 3 months, he looked at over 25 units over $500/week, with strong demand for each unit. People were paying $30-$80/week over the asking price just to secure an apartment!However, it looks like rental prices are slowing in all capital cities ... More About: Market , Rental , Tips , Metro
Summer holidays and Cricket - Australia, India and Sri Lanka
2007-12-23 22:01:00 One of my sporting passions is cricket and I miss watching live cricket matches here in the states. Australia has been the dominant team for the last 15 yrs - and it has been great to be a fan during that time. They do have a slight arrogance about them, so most non-Australia fans love to see them get beat (which rarely happens!). India , the biggest cricket loving nation, is touring Australia and were the last team to really challenge Australia (in Australia) during a test series. Their first test match is starting on boxing day (December 26th) and is being keenly anticipated. The one day series, which also includes Sri Lanka, should also be a cracker. My tip is for Australia to win the test series 2-0 and take home the one day trophy against Sri Lanka.Here is the full schedule for the 2007/8 Australia vs India series. Should be loads of fun! Shop the world's largest online marketplace at Ebay or direct at Amazon.comComment on this article at www.financeviewpoint.com More About: Cricket , Holidays , Summer
Saving for your Kids
2007-12-21 18:02:00 From a financial perspective children are probably one of our biggest expenses. The estimated costs involved with raising a child to the age of 18 is $250,000. That is a lot of money, given the average annual Australian household income is around $75,000. What's worse is that this does not include college/university costs after they turn 18, which can be just as high. While it is easy to accept this when it comes to our kids, we should put aside emotion and become financially smarter when looking out for our kids (and our own) future. One of the best things I did, was to open a high interest savings account for my son. So when he gets cash gifts on special occasions, we spend part of it on gifts (around 60%) and the remainder goes into the savings account. So assuming our regular contributions and gifts from relatives total to $1000 every year ($85 p/month), earning 7% interest, he will end up with close to $40,000 when he is 18. Not bad and no risk. However, given he will not a... More About: Kids , Saving
5 Quick and Useful Money Formulas
2007-12-20 19:28:00 Here are five simple formulas to help you quickly answer some common money and investing related questions:Q1. How many years does it take to double your money?A1 - Known as the rule of 72. Divide the number 72 by your estimated annual return. So for example, if you expect to earn 9% per annum, it will take eight years (72/9), to double your money.Q2. What am I giving up in retirement savings when I spend money today?A2 - Add a zero to what you spend if you are going to retire in 30+ years (assuming 8% return on your savings). Divide the number by 1.5 for every 10 years you get closer to retirement. For example, if you are going to retire in 30 years, spending $1000 today is equal to $10,000 in 30 yrs. If you are going to retire in 20 years, $1000 today is equal to approximately $6,666 ($10,000/1.5) in 20 years.Q3. How much do you need to earn, before taxes, to buy what you want?A3 - Multiply the cost by 1.5 if you are in the effective 33% tax bracket (ie if you earn more than $100,... More About: Money , Quick
Outlook for 2008 and Wii are out
2007-12-19 03:23:00 On the ABC inside business show, there was a piece on the 2008 Outlook for the Australian market and the impacts from Global markets. It is worth watching as the outlook was based on interviews with various analysts from leading investment houses. Click here to see the Video (you need Windows or Real Player). Overall, general doom and gloom is seen for the US economy. However, most analysts are positive on the Australian economy. They point to continued growth in the resource sector driven by China's demands as it continues to grow. So market weakness could present a good time to buy stocks like RIO and BHP.One thing though to always be cautious about is that analysts tend to be more bullish as they do other business with a number of companies they rate (This leads to a more rosy view of the overall economy as well). So if they get too negative on a company, it could affect other parts of the analysts parent company. This is what primarily led to a number of securities laws and re...
Guide to Choosing the Right Financial Planner
More articles from this author:2007-12-18 19:14:00 As we grow older, our financial (and life) matters get more complex. In addition, with all the financial advertising and options now available it is hard to sometimes figure out what your best current and future choices are. Do we only focus on retirement - will I have enough at retirement? What about enjoying life now? How will we pay for the kids schooling? The list goes on. One of the things I am doing to help get me through this financial maze is to seek the advice of a financial planner. However, even finding a good financial planner takes some work. Here are some points to consider and questions to ask that can help you select the right financial planner. It's important to feel confident about your choice, so take your time and meet at least 2-3 planners before choosing. How to choose a planner? All practicing financial planners must be licensed, but it's sensible to look for one who is also a member of a professional association ? the FPA is the peak bod... More About: Financial , Guide , Planner 1, 2, 3, 4, 5, 6, 7 |
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